The impact of sugar tax on carbonated soft drinks in Nigeria

Abstract

A sugar tax is a fiscal intervention levied on sugar-sweetened beverages (SSBs) to discourage consumption and improve population health. The over-consumption of SSBs is linked with the prevalence of obesity and diet-related non-communicable diseases (NCDs). Nigeria in the year 2022 introduces a 10 naira per litre excise tax on all non-alcoholic SSBs. This study assessed the impact of a sugar tax on the consumption of carbonated soft drinks in Nigeria. The study explored a mathematical model to estimate the effect of the sugar tax on the consumption of SSBs, three tax scenarios were assessed using Monte-Carlo Simulation. Historical consumption data from the 2018/2019 Nigeria Living Standard Survey was utilised. The outcome of the tax simulation revealed that a 10-naira excise tax on soft drinks is predicted to have a small effect on the price and quantity demanded of SSBs. The overall reduction in quantity demanded of SSB could be negligible if the tax rate does not increase the price by at least 20%. A 50-naira excise tax on soft drinks is anticipated to comply with the World Health Organization's recommendation, which calls for an increase in retail prices by at least 20%.